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The $132 Billion Opportunity for Hospitals Today

With the majority of patient care happening beyond the four walls of hospitals, there’s an incredible opportunity for providers who embrace ambulatory care and find ways to work in tandem with local employers.

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Once upon a time, hospitals were a way of life. When someone had an ailment, they would go to their local hospital for assessment and care from trusted medical professionals. Everything and everyone they could need was housed under one roof, meaning there was no appetite to go elsewhere for medical attention.

But times have changed.

Today, the majority of patient care happens beyond the four walls of hospitals. People flock to urgent care clinics, ambulatory surgery centers, imaging facilities, and similar offerings for their care needs.

According to a report from Daedal Research, the ambulatory surgery center market alone is expected to have an annual growth rate of 6% through 2023 — growing to become a $36 billion industry on its own.

While there will be no shortage of growth in the healthcare sector over the next decade, where that growth is expected to happen is perhaps more interesting. Based on information from the U.S. Bureau of Labor Statistics, there will be more than 3.3 million new jobs in healthcare and social services by 2030. But of those positions, only about 480,000 are expected to be in hospitals; 1.3 million are projected to be in ambulatory healthcare services.

What does all of this tell us?

There’s an outpatient battle brewing, with hospitals losing ground to ambulatory care. But they still have a lot of potential to seize some valuable turf — provided they act now.

The Importance of Cost and Convenience

The rise of ambulatory care and corresponding fall of hospitals have been in part driven by consumer desires to be more price-conscious with healthcare dollars — thanks to narrower networks and the rise of high-deductible health plans — and in part due to generational shifts.

Millennials and Gen Z consumers highly value price comparison and convenience, which is why online shopping has become so prominent in recent decades. Ambulatory care plays right into these preferences, providing both financial and convenience benefits to patients.

Consumers generally associate hospitals with surprise medical bills and a lack of transparency, which has created plenty of ill will. Meanwhile, ambulatory surgery centers tend to be cheaper than hospitals for similar procedures. Because ASCs do not require inpatient stays, they can provide many of the same services as a hospital’s outpatient department at a fraction of the cost.

And in terms of convenience, it’s hard to beat an urgent care center. These younger generations of customers don’t approach healthcare the same way as previous generations. While a Kaiser Family Foundation poll found that only 12% of respondents aged 65 and older lack a primary care provider, a whopping 45% of people 18 to 29 years old said the same. Urgent care has replaced PCPs because young consumers value things like online scheduling, extended service hours, and something as simple as the ability to park right by the front door rather than navigating a massive parking garage.

These evolving preferences have put hospitals in an unenviable position. To navigate this paradigm shift, hospitals need to look into building or buying ambulatory care centers to expand their networks — or potentially partnering with outpatient facilities on joint ventures.

They should view urgent care clinics, ASCs, and other offerings as extensions of their hospitals. While they might lose money on those facilities, they should be seen as a loss leader to create a revenue stream for high-acuity services.

Say you hurt your knee at the gym. You go to a nearby urgent care center to get it checked out, and they perform an MRI to make sure everything is OK. That MRI shows extensive damage, and the doctor then refers you to a different facility for surgery. Provided it’s an in-house urgent care clinic, it would only make sense that the associated hospital would then receive that traffic.

It’s all about meeting patients where they are and finding ways to steer them into your hospital for ongoing care.

How to Begin Partnering With Employers

Moving forward, it’s likely that employers will start acting a lot more like payers. And if you’re not partnering with these employers, they’ll find ways to incentivize employee volume to a different partner.

Here are a few steps hospitals can take to begin forging those partnerships.

1. Know your market.

No two markets are the same, and no two health systems are either. Do your research on your local market. You should be able to answer some basic questions: How many employers are there locally? Who are the main brokers? What industries employ the most residents of your region? Who are the main influencers impacting the decisions that employers make? Are they brokers, third-party administrators, or someone else entirely?

2. Start some conversations.

Once you’ve done your research on the market, it’s time to reach out to employers directly. Don’t let perfect get in the way of being good. It might feel like you need to have a well-formed strategy or plan in place before this step, but you don’t. Just start talking with employers in your region to better understand their needs, the problems they face, and how you might be able to help them.

3. Treat patients as customers.

Hospitals have unfortunately fallen behind on the likeability scale over the past decade or so. Employers don’t have relationships with them, and hospitals for a long time treated insurance companies as their customers rather than patients. When the customer experience wasn’t what they expected, people went elsewhere — similar to Blockbuster losing ground to Netflix or the way Uber overtook taxi companies.

Thankfully, it’s not too late for hospitals to begin prioritizing customer service again. It will mean rethinking established structures to put the needs of patients before those of insurance companies. By providing greater transparency to patients — particularly as it relates to prices — and meeting them halfway, hospitals can set a new standard for customer service that makes employers eager to work with them.

4. Find your right strategy (build it or buy it).

To be successful in partnering with local employers, you have two options. You can build an in-house team to handle these responsibilities, or you can partner with a third party to bridge these relationships.

But providers are not built to be sales engines — they are there to bring excellence in clinical care. Partnerships can help hospitals build their brand reputation and communicate that message in a positive light to the community. These third-party relationships can also help drive new commercial business.

For example, Paytient has done this successfully in several markets. We partner with well-respected providers in communities to increase commercially insured volume directly in that system — and have all out-of-pocket costs paid in full. High-quality patient volume is channeled to our providers due to program exclusivity, while providers eliminate risk to their balance sheets and receive cash paid upfront via card payment.

This increases the brand of our partner providers, with an improved patient experience leading to recurring volume and higher net promoter scores. Because the targeted patient volume does not need early-out engagement or any sort of collections process, the provider saves time and money. Ultimately, these efforts help increase access and affordability of care.

Seizing the Moment

According to a report from McKinsey, there’s a $132 billion opportunity out there for hospitals to win over customers and grow their business. Hospital leadership simply needs to embrace ambulatory care and find ways to partner with local companies — particularly any self-insured employers — to make it more financially attractive for local workers to visit their centers.

A failure to seize this opportunity to work with employers will lead to diminishing commercial volume in the long term, but getting folks to visit your clinics or urgent care centers early and often will build loyalty and lead to additional downstream patient care. This ongoing outpatient battle shows no signs of slowing, which makes it a great time to add some new pages to your hospital playbook.

The Business of Healthcare
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